In this ‘step out’ article on our platform proposition framework series, we review some of the most common pitfalls when creating and launching platform propositions. While the current industry press often presents conflicting views on whether a particular model is ‘the future’ or doomed to fail, we take a more practical and nuanced approach. Our perspective involves acknowledging, comprehending, and proactively addressing common pitfalls. Within our framework, we consider the following activities crucial for navigating challenges and achieving a successful outcome.
Define Proposition Ownership: To ensure successful collaboration between platform providers and wealth firms, it is crucial to establish clear principles around proposition ownership, outlining the responsibilities and levels of influence each party has. This understanding will help manage expectations and define roles from the beginning.
Justify Platform Fees and Charges: Assess the platform value chain and focus on customer outcomes to ensure that the split of platform fees and charges are transparent, justifiable, and in the best interest of the end consumer. This collaboration between both parties will help maintain a balance between the fees and the value each partner provides, ensuring ongoing compliance with Consumer Duty obligations.
Allocate Time for Contract Negotiation: It is essential to set aside sufficient time for contract negotiations, as the platform contract essentially encodes the joint proposition, responsibilities, agreed roadmap developments, service level agreements (SLAs), and governance structures. Engaging key stakeholders and decision-makers early in the process, equipped with a clear understanding of the intended model, will ensure that this task stays off the critical path of any platform implementation.
Understand Regulatory Permissions: Both platform providers and wealth firms must have a comprehensive understanding of relevant regulatory permissions, particularly the Client Assets Sourcebook (CASS). Ensuring that the permissions align with the chosen partnership model (and that levels of oversight are appropriate and evidenced) is crucial for a successful platform proposition.
Define Integration Capability/Requirements: Assess the need for integration with the wealth firm’s existing technology stack and retained applications, and evaluate whether APIs and file interfaces can meet the increasing demand for deep digital and data analytics integration. A clear understanding of these integration requirements ensures that the wealth firm’s digital ambitions can be fully met (both now and in the future). Note that not all APIs are created equal, and it is common for this problem to surface post-implementation when it is too late to change course.
Differentiate Configurability and Customisation: Recognize the difference between platform configurability and customisation to manage development time and flexibility expectations. Understanding which elements of the desired platform functionality fall into the configuration or customisation categories will help to properly understand both the scope and the risk of any implementation project. Put simply, the configuration provides a repeatable mechanism of platform differentiation across common scenarios, whereas customisation generally requires development and additional testing.
Define Minimum Viable Product: Conduct a development gap analysis to identify discrepancies between the wealth firm’s vision and the platform provider’s offering. Establish a clear, accountable roadmap to achieve the minimum viable product (MVP) and incorporate this plan into the contract to ensure both parties are on the same page, with a documented commitment to time schedules, quality, and remediation for non-delivery.
We suggested in the last article that it was essential to embrace the complexity that is inherent in building a platform proposition. However, in doing so, we are strong believers that ‘forewarned is forearmed’ when planning any such implementation. A robust and structured approach to navigating the likely pitfalls from the outset is essential.
With effective project management, governance, and a proactive approach to addressing these challenges, it is possible to deliver a successful platform proposition within agreed timelines and budgets. Our framework and toolkits, built on years of experience, aim to facilitate this process for clients, helping them achieve their goals in the platform proposition space.
In the next article, we’ll return to the platform framework to look at the key components of Core Platform Technology and Digital Capability.
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